Domaining is a lot like stock investing, the very best in the field have moved beyond basic strategies and have developed their own specific formulas for success. But just as with stocks, to obtain the skills necessary to reach that advanced stage, beginners must first understand the fundamentals of strategic domain buying. In this section we introduce you to five traditional domain buying strategies, and explain a bit about each.
- Trademark Typo Domains.
One of the original domainer buying strategies was to hunt for any trademarked names that hadn’t yet been purchased, and failing that, to purchase typos of those domains. These trademark typo domains often yielded a lot of type-in traffic, and because e-commerce law hadn’t yet developed to its current state, companies would often buy out these domainers at very inflated prices. But if you’re thinking about getting into trademark typo domaining, the ship has sailed. Current trademark law treats domainers that are seeing lots of traffic from a typo domain, and don’t otherwise have a legitimate business use for owning the name, as illegal trademark diluters. As such, trademark typo domainers typically have to turn over the domain to the trademark holder with little or no compensation. Simply stated, avoid the trademark typo strategy altogether.
- Keyword Typo Domains.
While the trademark typo domain loophole has closed, a very legitimate and ethical domaining technique is pursuing keyword typo domains. Keyword typo domains (e.g., Mortgeges.com) can bring in a good deal of type-in traffic and are often significantly undervalued. While normally these aren’t the type of domains that someone would want to build a high-value company around (though typo domain Voyuer.com went for $112,000 in 2005), smaller individual webmasters are always in the market for targeted type-in traffic, so these sites are often in high demand among small-time domain purchasers.
- Automated Volume Buying.
The next strategy, automated volume buying, is simply that; using an application to automatically search for available domains that meet your pre-set criteria, and purchasing the domains that result from the search. Automated volume buying requires, first and foremost, an excellent application to accept your search criteria and conduct the searches. While there are a number of domain research tools available for purchase, many top domainers use a customized version. No matter which volume buying tool you’re using, however, they all work in roughly the same way by allowing you to search WHOIS servers and filter results by keywords, Overture price ranges, search engine results, etc. So, for example, you could filter your potential domains by those that have a minimum of 1000 keyword searches per month and which yielded more than a top bid of $1.00 on Overture. While it is certainly true that now that more people are using automated volume buying tools the easiest bargains are usually taken, domainers can still find a good haul of cheap .com’s as long as they stay ahead of the curve by getting creative with their filter criteria.
If you’re looking for a domaining strategy that is longer-term but that can be highly lucrative, you might consider trendwatching. Trendwatching is simply the practice of anticipating popular domains before they become popular. The keys to successful trendwatching are good sources and creativity. One of the biggest mistakes novice domainers make, is attempting to trendwatch a very diverse group of industries, rather than focusing on a few and becoming an expert in those areas. The best way to start trendwatching is to pick two or three niches that you feel comfortable with and which are reasonably lucrative, then add eight to ten blogs within that niche to your RSS feed.Bloglines, Newsgator, and Google Reader are all free web-based feed readers, just in case you are unfamiliar with RSS. If you’re in a competitive niche, time is of the essence, so regularly check your feed for information on rising stars, new technologies, burgeoning trends or hot products, and once you hear of the trend, pounce on it immediately by buying up some relevant domains. In addition to RSS feeds, Google Trends can also help keep you on top of developing trends by showing relative query volume for one to five keywords or phrases. One thing to keep in mind when trendwatching, is that not every predicted trend will pan out, so anticipate plenty of total losses for every big hit. As a consequence, it is important to keep your domain holdings diversified, so that you aren’t too heavily invested in a single trend, and thus you can afford to wait out the staggering returns when one of your trend predictions proves true.
- Brute Force.
Automated Domain Research Tools (DRT’s) allow you to sift through millions of available domains to find the few thousand that you might be interested in buying. But getting from those thousand to identifying the few specific domains you want to purchase can often be accomplished only through brute force. By “brute force” we refer to the most common domaining technique, which involves the use of a compilation of different manual research tools to identify the most lucrative domains. Each tool listed in this category simply helps to facilitate the process of manually going through and examining each potential domain on an individual basis (thus the “brute force” moniker). While it is impractical to cover every sort of tool that would fall into the “brute force” category, we have compiled a few of the most common tools to get you started.
- The Marchex Model.
Back in early 2005, Marchex Inc. paid a whopping $164 million for 100,000 high-quality hand selected domains, planning in the short term to leverage the domains’ type-in traffic for revenue, and in the long-term to selectively sell their appreciating portfolio. Individual domainers can follow a similar strategy, by targeting domains in the $1,000 to $5,000 range that are of higher quality and thus have a higher long-term upside potential. By targeting a dozen or so sites in this higher price range, Marchex Model domainers can eliminate most casual domainer competition and though they face higher risks, there is the possibility of much higher returns. It should go without saying, that having access to cheap capital is a must, as well as having a good understanding of domain appraisals. Unlike brick and mortar real estate, the domain name resale market is still not fully competitive, meaning that domains are often wildly under-priced, but can also be wildly overpriced. As a result, simply following market valuation for a domain without having a firm grip on your own appraisal metrics, is a certain way to fail when Marchex domaining.